[House Report 117-368]
[From the U.S. Government Publishing Office]


117th Congress    }                                     {       Report
                        HOUSE OF REPRESENTATIVES
 2d Session       }                                     {      117-368

======================================================================



 
                           BUTCHER BLOCK ACT

                                _______
                                

 June 14, 2022.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

    Mr. David Scott of Georgia, from the Committee on Agriculture, 
                        submitted the following

                              R E P O R T

                        [To accompany H.R. 4140]

    The Committee on Agriculture, to whom was referred the bill 
(H.R. 4140) to make improvements with respect to the pricing of 
cattle in the United States, and for other purposes, having 
considered the same, reports favorably thereon with an 
amendment and recommends that the bill as amended do pass.
    The amendment is as follows:
  Strike all after the enacting clause and insert the 
following:

SECTION 1. SHORT TITLE.

  This Act may be cited as the ``Butcher Block Act''.

SEC. 2. ASSISTANCE FOR NEW AND EXPANDED LIVESTOCK OR MEAT PROCESSORS.

  (a) In General.--The Secretary of Agriculture (in this section 
referred to as the ``Secretary'') may make or guarantee a loan for the 
purpose of--
          (1) increasing capacity of livestock and poultry processing, 
        facilitating economic opportunity for livestock and poultry 
        producers through processing activities, and diversifying 
        processing ownership;
          (2) increasing the customer base or revenue returns of 
        livestock and poultry producers through investment in 
        processing capacity;
          (3) improving, developing, or financing livestock and poultry 
        processing capacity or employment including through the 
        financing of working capital; or
          (4) promoting the interstate trade and local sales of 
        processed livestock and poultry by financing improvements to 
        meet relevant Federal, State, and local regulatory standards.
  (b) Eligibility; General Limitations.--
          (1) Eligible recipient.--An entity shall be eligible for a 
        loan or guarantee under this section if the entity is--
                  (A) a public, private, or cooperative organization 
                organized on a for-profit or nonprofit basis;
                  (B) an Indian tribe on a Federal or State 
                reservation, or any other federally recognized Indian 
                tribal group; or
                  (C) an individual.
          (2) Facility location.--
                  (A) In general.--Except as provided in subparagraph 
                (B), a facility constructed, expanded, modified, 
                refurbished, or re-equipped with proceeds from a loan 
                made or guaranteed under this section shall be in a 
                rural area.
                  (B) Exception.--A facility constructed, expanded, 
                modified, refurbished, or re-equipped with proceeds 
                from a loan made or guaranteed under this section may 
                be in a non-rural area if--
                          (i) the primary use of the loan involved is 
                        for the facility, and the facility will 
                        increase the customer base or revenue returns 
                        of livestock and poultry producers that are 
                        located within 300 miles of the facility;
                          (ii) the loan involved will be used to 
                        increase the capacity in livestock and poultry 
                        processing in a region; and
                          (iii) the principal amount of the loan 
                        involved does not exceed $50,000,000.
                  (C) Rural area defined.--In this paragraph, the term 
                ``rural area'' has the meaning given the term in 
                section 343(a)(13) of the Consolidated Farm and Rural 
                Development Act (7 U.S.C. 1991(a)(13)).
          (3) Limitations.--
                  (A) Limitation on amount of loan involved.--A loan of 
                more than $50,000,000 may not be made or guaranteed 
                under this section.
                  (B) Limitation on eligibility.--A loan may not be 
                made or guaranteed under this section to an entity that 
                is owned in partnership or in whole by--
                          (i) a foreign entity; or
                          (ii) an entity that currently processes over 
                        5 percent of the daily harvest of any species.
  (c) Special Rules Applicable With Respect to Cooperatives.--
          (1) Limitation on amount of loan involved.--
                  (A) In general.--Notwithstanding subsection (b)(3), a 
                loan of not more than $100,000,000 may be made or 
                guaranteed for a cooperative organization under this 
                section.
                  (B) Conditions applicable if loan involved is for 
                more than $50,000,000.--A loan of more than $50,000,000 
                may not be made or guaranteed for a cooperative 
                organization under this section unless the loan is used 
                to carry out a project that significantly increases the 
                livestock and poultry processing in a region, where 
                insufficient processing capacity exists, as determined 
                by the Secretary.
          (2) Intangible assets.--
                  (A) In general.--In determining whether a cooperative 
                organization is eligible for a loan or guarantee under 
                this section, the Secretary may consider the market 
                value of a properly appraised brand name, patent, or 
                trademark of the cooperative.
                  (B) Accounts receivable.--In the sole discretion of 
                the Secretary, if the Secretary determines that the 
                action would not create or otherwise contribute to an 
                unreasonable risk of default or loss to the Federal 
                Government, the Secretary may take accounts receivable 
                as security for the obligations entered into in 
                connection with a loan made or guaranteed under this 
                section, and a borrower may use accounts receivable as 
                collateral to secure such a loan.
          (3) Purchase of cooperative stock.--
                  (A) In general.--The Secretary may make or guarantee 
                a loan in accordance with this section to an individual 
                farmer or rancher for the purpose of purchasing capital 
                stock of a farmer or rancher cooperative undertaking an 
                eligible project under this section.
                  (B) Processing contracts during initial period.--A 
                cooperative described in subparagraph (A) with respect 
                to which a farmer or rancher receives a guarantee to 
                purchase stock under subparagraph (A) may contract for 
                services to fulfill any eligible purpose under this 
                section, during the 5-year period beginning on the date 
                the cooperative commences operations, in order to 
                provide adequate time for the planning and construction 
                of the processing facility of the cooperative.
                  (C) Financial information.--A farmer or rancher from 
                whom the Secretary requires financial information as a 
                condition of making or guaranteeing a loan under 
                subparagraph (A) shall provide the information in the 
                manner generally required by commercial agricultural 
                lenders in the geographical area in which the farmer or 
                rancher is located.
  (d) Conditions Applicable With Respect to Using Loan Involved for 
Refinancing.--A borrower may use 25 percent of a loan made or 
guaranteed under this section to refinance a loan made for a purpose 
described in subsection (a) if--
          (1) the borrower is current and performing with respect to 
        the loan to be refinanced;
          (2) the borrower has not defaulted on any payment required to 
        be made with respect to the loan to be refinanced;
          (3) none of the collateral for the loan to be refinanced has 
        been converted; and
          (4) there is adequate security or full collateral for the 
        loan to be refinanced.
  (e) Loan Appraisal.--The Secretary may require that any appraisal 
made in connection with a loan made or guaranteed under this section be 
conducted by a specialized appraiser that uses standards that are 
similar to standards used for similar purposes in the private sector, 
as determined by the Secretary.
  (f) Preference.--In making or guaranteeing a loan under this section, 
the Secretary shall give a preference to applicants that have 
experience in livestock and poultry processing and can quickly scale-up 
to increase overall processing capacity in the region involved.
  (g) Limitations on Authorization of Appropriations.--There is 
authorized to be appropriated to carry out this section $100,000,000 
for each of fiscal years 2023 through 2025.

SEC. 3. NEW AND EXPANDING LIVESTOCK OR MEAT PROCESSING GRANTS.

  (a) In General.--The Secretary of Agriculture may make grants to--
          (1) expand, diversify, and increase capacity in livestock or 
        poultry processing activities;
          (2) improve compliance with livestock and poultry processing 
        statutes (including the regulations issued thereunder), such as 
        the Federal Meat Inspection Act (21 U.S.C. 661) and the Poultry 
        Products Inspection Act (21 U.S.C. 454);
          (3) identify and reduce barriers to entry for new for new 
        livestock and poultry processers; or
          (4) update, expand, or otherwise improve existing facilities.
  (b) Eligible Grantees.--An entity shall be eligible for a grant under 
this section if the entity is--
          (1) a governmental entity;
          (2) a public, private, or cooperative organization organized 
        on a for-profit or nonprofit basis; or
          (3) an Indian tribe on a Federal or State reservation or any 
        other federally recognized Indian tribal group.
  (c) Use of Funds.--An entity to which a grant is made under this 
section may use the grant funds to establish or support new or expanded 
livestock or poultry processing activity, or other activity which will 
increase the customer base or revenue returns of livestock and poultry 
producers, by undertaking project, that--
          (1) identifies and analyzes business opportunities, including 
        feasibility studies as required for creditworthiness;
          (2) identifies, trains, and provides technical assistance to 
        existing or prospective rural entrepreneurs and managers or 
        processing facilities;
          (3) provides technical assistance to gain compliance with 
        Federal, State, or local regulations;
          (4) conducts regional, community, and local economic 
        development planning and coordination, and leadership 
        development; or
          (5) establishes a center for training, technology, and trade 
        that will provide training to livestock or poultry processing 
        employees.
  (d) Preference.--In awarding grants under this section, the Secretary 
shall give a preference to applicants that have experience in livestock 
and poultry processing and can quickly scale-up to increase overall 
processing capacity in the region involved.
  (e) Limitations on Authorization of Appropriations.--There is 
authorized to be appropriated to carry out this section $20,000,000 for 
each of fiscal years 2023 through 2025.

                           BRIEF EXPLANATION

    This legislation, as reported out of Committee, authorizes 
direct and guaranteed loans and grants to help expand livestock 
and poultry processing capacity and promote interstate and 
local sales of processed livestock and poultry products by 
financing improvements to facilities so that they meet relevant 
local, state, and Federal regulations. The legislation would 
authorize $100 million for each fiscal year from 2023 to 2025 
for loans and loan guarantees, and $20 million per fiscal year 
for the same time period for grants.

                    PURPOSE AND NEED FOR LEGISLATION

    A number of black swan events over the past few years, 
including the pandemic, a fire at a Tyson facility in Holcomb, 
Kansas, and a cyberattack against JBS, have underscored the 
importance of a resilient and diversified processing sector for 
both producers and consumers. The Butcher Block Act would 
support the establishment or enhancement of small- and medium-
sized processing facilities, ultimately increasing nationwide 
processing capacity.
    According to a recent Rabobank report, an additional daily 
packing capacity of 5,000 to 6,000 head of fed cattle could 
restore the historical balance of fed cattle supplies and 
packing capacity. Unfortunately, there are critical roadblocks 
to new and expanding market entrants. Between labor 
availability and meeting necessary worker and food safety 
requirements, industry sources estimate that a new plant could 
cost $100-$120 million for every 1,000 head of daily capacity. 
USDA has sought to address this issue by providing funds to 
support small- and medium-sized processors, and this 
legislation would further support those efforts.

                      H.R. 4140, Butcher Block Act


                           SECTION-BY-SECTION

Section 1. Short title

    Section 1 provides the short title of the bill as the 
``Butcher Block Act.''

Sec. 2. Assistance for new and expanded livestock or meat processors

    Section 2 allows the Secretary of Agriculture to make 
direct or guaranteed loans to eligible recipients for the 
purpose of increasing capacity of livestock and poultry 
processing, facilitating economic opportunity for livestock and 
poultry producers through processing activities, and 
diversifying processing ownership; increasing the customer base 
of livestock and poultry producers through investment in 
processing capacity; improving livestock and poultry processing 
capacity or employment; or promoting the interstate trade and 
local sale of processed livestock and poultry by financing 
improvements to meet regulatory standards.
    Subsection (b) defines ``eligible recipients'' as a public, 
private, or cooperative organization organized on a for-profit 
or nonprofit basis, an Indian tribe, or an individual. 
Paragraph (2) requires that any facility constructed or 
expanded with proceeds from the loan be in a rural area unless 
the facility is designed to increase the customer base or 
revenue returns of livestock and poultry producers within a 
300-mile range by increasing processing capacity in the region 
and the principal amount of the loan does not exceed 
$50,000,000. The paragraph also clarifies ``rural area'' has 
the meaning given in section 343(a)(13) of the Consolidated 
Farm and Rural Development Act. Paragraph (3) requires that 
loans must not be more than $50,000,000 and prohibits loans 
from being made or guaranteed to an entity that has any 
ownership by a foreign entity or an entity that currently 
processes over five percent of the daily harvest of any 
species.
    Subsection (c) limits the amount of a loan for a 
cooperative organization to not more than $100,000,000, but to 
be eligible for loans of more than $50,000,000, the loan must 
be used to significantly increase processing in regions with 
insufficient processing capacity as determined by the 
Secretary. When determining eligibility of a cooperative 
organization for a loan, the Secretary may consider the market 
value of a brand name, patent, or trademark of the cooperative. 
The Secretary may take accounts receivable as security for the 
obligations entered into in connection with a loan made or 
guaranteed under this section, and a borrower may use accounts 
receivable as collateral to secure such a loan. The subsection 
also allows the Secretary to make or guarantee a loan to an 
individual farmer or rancher for the purpose of purchasing 
capital stock in a producer-owned cooperative. The producer-
owned cooperative may contract for services to process 
agricultural commodities or value-added agricultural products 
during the first 5 years that the cooperative begins 
operations. The farmer or rancher receiving the loan must 
provide the Secretary the same financial information as is 
generally required by commercial agricultural lenders.
    Subsection (d) allows an entity to use 25 percent of a loan 
to refinance a loan made if certain requirements are met.
    Subsection (e) allows the Secretary to require any 
appraisal made in connection with a loan be conducted by a 
specialized appraiser.
    Subsection (f) requires the Secretary to give a preference 
to applicants that have experience in livestock or poultry 
processing and can quickly increase processing capacity.
    Subsection (g) authorizes $100,000,000 in appropriations 
for each of Fiscal Years 2023 through 2025.

Sec. 3. New and expanding livestock or meat processing grants

    Section 3 allows the Secretary to make grants to eligible 
entities to expand, diversify, and increase capacity in 
livestock or poultry processing activities; improve compliance 
with livestock and poultry processing statutes; identify and 
reduce barriers to entry for new livestock and poultry 
processors; or improve existing facilities.
    Subsection (b) defines eligible grantee as a government 
entity, a public, private, or cooperative organization 
organized on a for-profit or nonprofit basis, or an Indian 
Tribe.
    Subsection (c) allows eligible grantees to use grant funds 
to establish or support new or expanded processing activity by 
undertaking projects that analyze business opportunities; 
provide technical assistance to existing or prospective rural 
entrepreneurs and managers or processing facilities; provide 
technical assistance to gain compliance with Federal, State, or 
local regulations; conduct economic development planning and 
coordination, and leadership development; or establish a center 
for training, technology, and trade that will provide training 
to livestock or poultry processing employees.
    Subsection (d) requires the Secretary to give preference 
for grant applicants that have experience in livestock and 
poultry processing and can quickly scale-up to increase overall 
processing capacity in the region.
    Subsection (e) authorizes $20,000,000 in appropriations for 
each of Fiscal Years 2023 through 2025.

                        COMMITTEE CONSIDERATION

                              I. Hearings

    The Committee on Agriculture has held three hearings in the 
117th Congress to examine issues facing the cattle industry and 
hear various perspectives on how to address industry and market 
challenges.
    On July 28, 2021, the Subcommittee on Livestock and Foreign 
Agriculture held a hearing entitled State of the Beef Supply 
Chain: Shocks, Recovery, and Rebuilding where some of the 
following witness testified on matters addressed in H.R. 4140:
           Dr. Jayson Lusk, Distinguished Professor and 
        Head of the Department of Agricultural Economics, 
        Purdue University, West Lafayette, IN
           Dr. Jennifer van de Ligt, Director, Food 
        Protection and Defense Institute, University of 
        Minnesota, St. Paul, MN
           Dr. Keri Jacobs, Associate Professor of Ag & 
        Applied Economics, Division of Applied Social Sciences, 
        College of Agriculture, Food and Natural Resources, 
        University of Missouri, Columbia, MO
           Dr. Dustin Aherin, Vice President and Rabo 
        Research Animal Protein Analyst, Rabo AgriFinance, 
        Chesterfield, MO
    In response to questions from Members of the Committee, 
witnesses discussed the potential impacts of increased capacity 
for livestock processing as well as the challenges faced by new 
and expanding facilities.
    On October 7, 2021, the full Committee held a hearing 
entitled A Hearing to Review the State of the Livestock 
Industry where the following witnesses testified on some 
matters that were subsequently addressed in H.R. 4140:
    Panel 1:
           The Honorable Chuck Grassley (R), United 
        States Senator, Iowa
    Panel 2:
           The Honorable Thomas J. ``Tom'' Vilsack, 
        Secretary, U.S. Department of Agriculture
    Panel 3:
           Mr. Todd Wilkinson, Vice President, National 
        Cattlemen's Beef Association, DeSmet, SD
           Mr. Francois Leger, Owner, FPL Food, on 
        behalf of the North American Meat Institute, Augusta, 
        GA
           Mr. Scott Blubaugh, President, Oklahoma 
        Farmers Union, on behalf of National Farmers Union, 
        Tonkawa, OK
           Mr. Scott Hays, Vice President, National 
        Pork Producers Council, Monroe City, MO
           Mr. Brad Boner, Vice President, American 
        Sheep Industry Association, Glenrock, WY
    This hearing examined various aspects of the livestock 
industry including how increasing processing capacity could 
improve the negotiating position of producers when they market 
their cattle.
    On April 27, 2022, the full Committee held a hearing 
entitled An Examination of Price Discrepancies, Transparency, 
and Alleged Unfair Practices in Cattle Markets where the 
following witnesses testified on matters addressed in H.R. 
4140:
    Panel 1:
           Mr. Coy Young, cow/calf producer, 
        Blythedale, MO
           Mr. Gilles Stockton, cow/calf producer, on 
        behalf of National Plains Research Council, Grass 
        Range, MT
           Mr. Don Schiefelbein, cattle producer and 
        President, National Cattlemen's Beef Association, 
        Kimball, MN
    Panel 2:
           Mr. David MacLennan, Chief Executive 
        Officer, Cargill, Inc., Wayzata, MN
           Mr. Tim Schellpeper, Chief Executive 
        Officer, JBS USA Holdings, Inc., Greeley, CO
           Mr. Tim Klein, Chief Executive Officer, 
        National Beef Packing Company, LLC, Kansas City, MO
           Mr. Donnie King, Chief Executive Officer, 
        Tyson Foods, Springdale, AR
    Witnesses discussed their views on concentration and 
competition in the livestock industry including the potential 
benefits of increased processing capacity.

                           II. Full Committee

    On May 17, 2022, the Committee on Agriculture met pursuant 
to notice, with a quorum present to consider H.R. 4140, To make 
improvements with respect to the pricing of cattle in the 
United States, and for other purposes. Chairman Scott made an 
opening statement as did Ranking Member Thompson. Chairman 
Scott requested other Members submit their opening statements 
for the record. Without objection, H.R. 4140 was placed before 
the Committee for consideration, a first reading of the bill 
was waived.
    Chairman Scott recognized Mr. Johnson, the bill's sponsor, 
to speak on the bill. Discussion occurred. Chairman Scott made 
a motion for unanimous consent to discharge H.R. 4140 from the 
Subcommittee on Commodity Exchanges, Energy, and Credit. The 
motion was adopted without objection. Chairman Scott made a 
motion for unanimous consent to adopt and favorably report H.R. 
4140 to the House. The motion for unanimous consent was adopted 
without objection.
    The Committee recessed until May 18, 2022. At the 
conclusion of the meeting, Chairman Scott advised Members that 
pursuant to the Rules of the House of Representatives, Members 
had until May 20, 2022, at 12:00 p.m. to file any supplemental, 
additional, dissenting, or minority views with the Committee. 
Without objection, staff was given permission to make any 
necessary technical, clarifying, or conforming changes to 
reflect the intent of the Committee. Chairman Scott thanked all 
Members and adjourned the meeting.

                            COMMITTEE VOTES

    In compliance with clause 3(b) of rule XIII of the House of 
Representatives, H.R. 4140 was reported by unanimous consent 
with a majority quorum present.

                      COMMITTEE OVERSIGHT FINDINGS

    In compliance with clause 3(c)(1) of rule XIII and clause 
2(b)(1) of rule X of the Rules of the House of Representatives, 
the Committee's oversight findings and recommendations are 
reflected in the descriptive portions of this report.

          COST OF LEGISLATION AND THE CONGRESSIONAL BUDGET ACT

    With respect to the requirements of clause 3(c)(2) of rule 
XIII of the Rules of the House of Representatives and section 
308(a) of the Congressional Budget Act of 1974 and with respect 
to requirements of clause (3)(c)(3) of rule XIII of the Rules 
of the House of Representatives and section 402 of the 
Congressional Budget Act of 1974, the Committee has requested 
but not received a cost estimate for this bill from the 
Director of Congressional Budget Office. The Committee adopts 
as its own cost estimate the forthcoming cost estimate of the 
Director of the Congressional Budget Office, should such cost 
estimate be made available before House passage of the bill.
    The Committee has requested but not received from the 
Director of the Congressional Budget Office a statement as to 
whether this bill contains any new budget authority, spending 
authority, credit authority, or an increase or decrease in 
revenues or tax expenditures. Congressional Budget Office staff 
has informed the Committee on a preliminary, informal, 
nonbinding basis that there does not appear to be any revenue 
effects or direct spending associated with the bill.

                   CONSTITUTIONAL AUTHORITY STATEMENT

    The Committee finds the Constitutional authority for this 
legislation in Article I, section 8, clause 3, that grants 
Congress the authority to regulate foreign and interstate 
commerce.

                    PERFORMANCE GOALS AND OBJECTIVES

    Pursuant to clause 3(c)(4) of rule XIII of the House of 
Representatives, the performance goals and objectives of this 
measure are to authorize direct and guaranteed loans and grants 
to finance improvements to livestock and poultry processing 
facilities to increase capacity.

                      ADVISORY COMMITTEE STATEMENT

    No advisory committee within the meaning of section 5(b) of 
the Federal Advisory Committee Act was created by this 
legislation.

                APPLICABILITY TO THE LEGISLATIVE BRANCH

    The Committee finds that the legislation does not relate to 
the terms and conditions of employment or access to public 
services or accommodations within the meaning of section 
102(b)(3) of the Congressional Accountability Act (Public Law 
104-1).

                       FEDERAL MANDATES STATEMENT

    An estimate of Federal mandates prepared by the Director of 
the Congressional Budget Office pursuant to section 423 of the 
Unfunded Mandates Reform Act was not made available to the 
Committee in time for the filing of this report. The Chair of 
the Committee shall cause such estimate to be printed in the 
Congressional Record upon its receipt by the Committee.

                           EARMARK STATEMENT

    This measure does not contain any congressional earmarks, 
limited tax benefits, or limited tariff benefits as defined in 
clause 9(e), 9(f), or 9(g) of rule XXI of the House of 
Representatives.

                    DUPLICATION OF FEDERAL PROGRAMS

    This measure does not establish or reauthorize a program of 
the Federal Government known to be duplicative of another 
Federal program, a program that was included in any report from 
Government Accountability Office to Congress pursuant to 
section 21 of Public Law 111-139, or a program related to a 
program in the most recent Catalog of Federal Domestic 
Assistance.

                  DISCLOSURE OF DIRECTED RULE MAKINGS

    The Committee does not believe that the legislation directs 
an Executive Branch official to conduct any specific rule 
making proceedings within the meaning of 5 U.S.C. 551.

                                  [all]